Is the established bell curve a bottleneck for organisations looking for growth

Traditional and the most established model of appraisal is what we call as a Bell Curve model. The organization believes that a small percent of their workforce, say 5% are star performers followed by a little more number of employees who are ‘high performers’ and most of them are ‘Performers’ who have done what was assigned to them.  The typical 5 (Star)-25 (High) -60 (Performers)-10 (Low Performers) model is popular in most of the companies today and has not changed much over several years. The HR and finance also finds it easier as fixed numbers of such performers make it easy for them to predict their annual increment outflow.

bell curve2The bell curve model is based on the premise that under any situation, it is always true that only a small number of employees can be star performers. These people will always get the best increments and every effort is put to keep them in the organization. This sounds good so far. Situation however starts becoming murky as this rating is almost always dependent on the manager of the employee who more often than not is accused of favoring only favorite few. It is also observed that only a handful of the managers can remain very strict and unbiased. It is common understanding th with their ratings and as they become familiar with their team members, specially those with whom they work closely would almost always take away the star ratings. It essentially means that those who are rated as star performers by these managers are almost always rated stars, giving almost no scope for new employees to enter this coveted club. Fingers are also raised by employees on the capability of their manager’s ability to identify the true performers as well. This leads to a jam situation where even deserving employees who could be doing really great feels cheated and more often than not leave the organization. This situation also ends up encouraging mediocrity where there is no attempt ever made to challenge the star and high performers who tend to become relaxed and reduce on their performance in almost all the cases. Such performers see themselves as star performers for their tenure in the company more as a matter of right than their performance outcome. Such employees thereafter set the standards of performance that remains unchallenged that typically reduce over years, compromising the very basic fabric of the organization that was created by best talents.

This situation is called a downward spiral where it is easy to fall in the traps of internal politics, bureaucracy and silos that threaten the organization’s growth and eventually make them weak. Such a situation pushes top management to correct the situation but in most of the cases the fundamental issue is left unattended.

Old and established organizations have gained a lot of market share and minds of the customers. Normally it would have been easy for the biggies to continue with their ways unchallenged. The growth of the startup culture has started threatening the big companies. The threat has become severe because these small companies are coming with great innovations at low costs that is challenging the large company’s growth and profitability like never before. Suddenly every big and small company wants to work like a startup. They do everything including talking with latest buzzwords, giving inspiring speeches but would do a precious little to change themselves.

Many however do the change. Some in a planned way and some jump in without much thought. One such change is ‘abolishing the dreaded bell curve’. The journey however can be very challenging and have its own pains of chartering into unexplored territories by shaking something stable. Let us understand what makes the established bell curve model that worked well for so many years is not proving to be a good model any more. The truth of this curve getting abolished and what companies can face as a challenge in their growth and survival due to people engagement related to their performance evaluation will be discussed in my upcoming blogs.

Alok Kumar

Alok Kumar is Managing Partner of SRKay Consulting group, a private equity company, nurturing innovative ventures. Alok also serves on the board of ICCL (Indian Clearing Corporation Limited - A subsidiary of BSE- Bombay Stock Exchange) as an external advisor for technology and information security. Prior to this, Alok had been Managing Director of Sears IT & Management Services India Private Limited (SHI) since its inception in December 2009 and served in the same position till very recently. Having been in senior IT management positions in Fortune 500 companies, Alok has won several national and international awards. Alok is instrumental in planning and setting up SHI and thereafter growing it to a multi-locational thousand-plus people organization. Over the last five years, with his strategic vision, Alok helped SHI grow roots in India, develop and support technology applications and infrastructure across core mainframe, cutting edge e-Commerce and big data technologies. With his unique people-oriented transformational leadership style, Alok turned SHI into one of the most valued investments of Sears, garnering great ROIs, and creating value much beyond cost arbitrage. Under his tutelage, SHI has filed two patents and is recognized widely for its best practices in various areas, the latter, currently featured in Indian Institute of Management (IIM) case studies. SHI also became a CMMI Level 3, PCMM Level 3, and ISO 20000 certified organization. Alok is a widely acclaimed corporate leader in India today. He regularly participates and leads various forums as a keynote speaker and is an author of several books in different genres. Alok has several awards to his credit. He is particularly known in the industry for his people management skills and innovative ideas in improving the productivity of employees through unique people practices. He has been credited with the following industry awards: ¬ Emerging Leader of the Year award 2013 by ¬ Game Changer CEO of the Year 2013 (SHRM) ¬ CIO 100 - The Bold CIOs - 2008 (Reliance Infosolutions) ¬ CIO - Ones to Watch Award 2008 (Reliance Industries) ¬ Extended Manager Award - CIOL 2004 (Tata Teleservices) As an able leader of SHI, Alok got SHI recognized widely in the industry with the following several awards: ¬ CII Award for HR Best Practices in 2014 ¬ Global Excellence in Outsourcing Award - AIOP (Phoenix 2013) ¬ IT Innovation Award (Design & Engineering) - Computer Society of India 2012 ¬ Golden Company of the Year - Economic Times 2011-12 ¬ 7th Employer Branding Awards - World HRD Congress (Mumbai, India) 2013: • ‘Asia’s Best Employer’ Award • ‘Best HR Strategy’ in line with business • HR Leadership Award • Talent Management Award by Bloomberg TV India ¬ Employer Branding Awards - World HRD Congress (Singapore, Asia) 2013: • 7th rank in ‘Asia’s Best Employer’ award • Award for ‘Best HR Strategy’ in line with the business • HR Leadership Award Other recognitions: Alok had served on the distinguished panel of NASSCOM's GIC (Global In-house Centers) National Council members. The council members play a key role in major initiatives of the industry and include the torch bearers of IT industry as panel members. Books and Papers: Alok is an established author, with three books to his credit. Alok’s third and latest book, a novel, “The Spy from Unaula” is a 2015 publication. A handwriting analysis enthusiast, Alok collaborated with his wife Nandani on the book, “Handwriting Speaks” in 2006. “Value Sourcing – Future of IT Outsourcing” was co-authored with Keith Sherwell (currently CIO, Altice USA) and was released in 2013. Alok also researched and published two whitepapers: a. “Creating next generation captives” talks about the best practices that are helping generate higher value from the IT company captives.

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3 Responses

  1. Rakesh Oza says:

    A very interesting topic and thanks for sharing your insights on the same. This will call for a paradigm shift in the approach of the organisation in appraisal process which will initially be resisted like any other change being implemented by organisations. However the new process should eventually settle down and meet the objective of every organisation i.e. identify key talent and award and retain them.

    Rakesh Oza

  2. Statistical procedures make some fundamental assumptions in order to provide magical forecast on probability for observing a particula mean or a particular difference between two means. In other words the “Assumption of Normality” stresses the condition that data inside each sample is normal, not just that the means across samples are normal.

    Therefore bell curve in staff appraisal can be relied only if each sample data for employee performance is as close as is possible to normal (excluding favourite men of a Project Manager). A majority of the organisations have pyramidal hierarchies, and everybody cannot reach the top. In such scenarios Bell Curves comes as a handy tool.

  3. Geetanjali Sharma says:

    Increasingly companies are doing away with the bell curve today and prod to be a part of the organisation that has taken this step ahead of other market leaders. In my opinion, the bell curve was mis-used. Organisations started forced ranking associates, managers got an easy shield to explain why an associates rating was low and just did not take the efforts to justify enough.

    This change was long overdue.

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